An Economist’s Defense of Tenure

There’s been a lot of talk about tenure recently, including its high cost to universities. But tenure is probably not as bad or as costly as it’s cracked up to be.              

In practice, tenure is a life sinecure. Unless you really mess up—maybe commit a felony in public—a tenured job is not going away. Although tenured faculty do not legally have a job for life, de facto they do, because college administrators will not lower the boom (they could, as Ryan Amacher and I detailed in the book Faulty Towers). The tenured faculty who are the least effective, as evaluated by the administrators, will get smaller pay raises, fewer new pencils, and worse teaching assignments (e.g., the class for dumb freshmen at a bad time), but they will not be fired.

The result of tenure is rather like what we see in the airlines. The pilots are unionized and, like all union workers, are less productive per dollar of salary than they would be in the absence of the union. But the airlines have devised ways of getting around the problem, at least partly. One is to persuade the union to allow hiring new people on a different, lower pay scale. Those B-scale pilots work more for less, hoping to move up the ladder some day. Or the airline may hire less-costly pilots on contract outside the company via a subcontractor, the feeder airline.

Similarly, universities lower their production costs by hiring B-scale faculty. Adjuncts, instructors, clinical professors, call them what you will, these are non-tenure-track positions. These folks teach more classes per semester than do the regular faculty, are paid less, and can be dismissed at any time. They are not expected to do research, which is the justification for the vaunted status of the tenured faculty. (The value of their research is another story.)

How did this two-tier system come about? Decades ago there was a general shortage of faculty who had PhDs, but now there are surpluses of people with graduate degrees in many fields. A person with a PhD in history or English is lucky to get a job anywhere, because there are so many people with those degrees.  Just as many people continue to pay large sums to get a commercial pilot’s license in hope of being a captain for Delta, but end up flying for Bush League Commuter Airline, wanna-be professors still obtain PhDs in fields with little chance of a good job.

This is not true in all fields. There happens to be a shortage of people with PhDs in accounting, finance, and certain other disciplines.  New graduates with such degrees get snapped up in a minute at high prices, the result of supply and demand. The shortage occurs because people in those fields can get rewarding jobs with less education—jobs that may pay more than professors make. Few can be enticed to stay in school to get a PhD.

In such fields, universities must offer highly competitive packages. Administrators do not want constant turnover in faculty—you cannot build a decent program that way. You can hire a local accountant to come teach Accounting 101, but you cannot run a full-scale academic program without a core permanent faculty. Thus, this non-academic competition boosts salaries.

But in many fields, such as liberal arts, there are few non-academic alternatives. PhDs face intense competition, as do new pilots, and that competition drives down wages, except for the lucky few who get a regular tenure slot at a real university. Most end up in adjunct slots at an elite university, or in a faculty position at a regional school where they would rather not be.

A small thought experiment. You are a new PhD in accounting (a competitive field, remember). A university offers to hire you for $140,000 a year to teach two classes per semester and, if you publish some articles in the coming years, you will be granted tenure. Your salary will rise a bit, but not a lot if you receive tenure, but if you like the school and the town, you can settle down.

How much more would you have to be paid to take a similar job at another university that will never give you job security—a place where you can be dismissed at any time? In a competitive market, the school would have to pay more, perhaps $175,000 a year, for the same teaching load. So the cost to the university rises. One way to keep down salary costs is to throw in the bone of possible tenure. Note that this market is competitive—the accounting professor can waltz off to umpteen accounting firms and get paid more.

Then, say after 10-15 years, the new professor is now a tenured full professor. The benefit of tenure for her is that she doesn’t have to worry as much about staying attractive to other schools by publishing a lot in accounting journals—a key measure schools use to see if a job candidate knows her stuff. Perhaps the professor will spend more time on designing new classes and helping redesign the curriculum to respond to the changing nature of the accounting profession. That is, people with lifetime appointments are more likely to do scut work for the institution, such as meeting with students and doing dull administrative chores that happen to require some expertise, than are transitory faculty coming and going every few years. From an administrator’s viewpoint, that is a mark in favor of tenure.

Furthermore, for long-term relationships, a core stable faculty is valuable. Alums who visit their alma mater love to see that good old Professor Chips is still around. If everyone comes and goes every few years, there will be lower institutional loyalty on the part of alums. That means lower revenue.

The market in the disciplines with a glut of people with PhDs seeking employment is competitive, too—but differently. An English department has the luxury of picking among hundreds of applicants for an open tenure-track position.  (The accounting department, by comparison, is lucky to get twenty applicants—all of whom have other schools to talk to.) Because the supply is large and the number demanded is small, the salary of the new English professor will be a fraction of the new accounting professor’s. Schools do not pay more than they need to pay.

Yes, the English department can hire adjuncts to cover English 101 and such courses, at even lower cost than full-time faculty. To have a structured program, however, with advanced courses and maybe graduate courses, you need a core stable faculty. They are likely to have tenure.

Someone has to decide what the Accounting Department or English Department will do. People with expertise have a better idea than those without. The provost (academic vice president) at my university is a biologist who inevitably relies on permanent faculty for guidance about other disciplines. At times he smells a rat and forces changes in some department, but largely he relies on people he thinks are competent in assorted fields to make decisions.

On net, the system does not work badly. It could be better. Tenure, if enforced as it legally exists, need not mean lifetime job security. A school can fire a person who demonstrates incompetence. But it is not easy, and when it happens, all hell breaks loose. Administrators are denounced as Nazis who are destroying precious academic freedom. So they try to avoid that, in part by being reasonably careful about who is granted tenure—many are not.

The real opposition to tenure seems to come from those who object to the political leanings of faculty. Critics are correct that most academic departments in the liberal arts and social sciences at most universities are dominated by left-wingers. Those folks are not interested in having more than a token moderate or conservative around. This is not new; it has been that way for many decades. Engineering, hard science, and business do not face as much of the political problem because these areas have tougher, fairly objective standards. Scientists should know good science when they see it. But English and the other “soft” areas have no such luxury. If faculty wish to declare that a book about cross-dressing, transgender issues in Shakespearean literature is high scholarship, they do.

Propping up the politically driven members of a faculty is a disadvantage of tenure. But some of the other disadvantages aren’t all that severe. And if administrators had a little more backbone, the disadvantages would be even smaller.